ASX retail shares have had a rough ride in 2022 so far – with Kogan.com Ltd (ASX: KGN) coming in as one of the worst performers.
The Kogan share price has slumped 31% year to date.
How the Kogan share price stacks up against its peers in 2022
Its tumble has only been bested by the share price of fellow online retailer, Temple & Webster Group Ltd (ASX: TPW), which has fallen 32%.
Other consumer goods shares, such as Adairs Ltd (ASX: ADH), Nick Scali Limited (ASX: NCK), and Accent Group Ltd (ASX: AX1) are also down – having fallen 26%, 18%, and 24% respectively in 2022.
Meanwhile, some S&P/ASX 200 Index (ASX: XJO) retailers, such as JB Hi Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) are in the green – having gained 3% and 7% respectively.
For context, the ASX 200 Index has slumped 3% in 2022.
With so many of the ASX's favourite retailers in the red, greener things must be coming, right?
Think again dear investor. Here's what Morgan Stanley is predicting for the retail sector's future.
What's next for ASX retail shares?
A recent tumble experienced by many of the most recognisable ASX retail shares might have investors dying to enter the sector.
But Morgan Stanley chief investment officer of wealth management, Lisa Shalett is warning bullish buyers to carefully consider the market.
She believes a shift in consumer spending could be heading our way, pushing spending out of goods and into services.
While that might be good news for shares in the travel, leisure, and entertainment sectors, it could harm ASX retailers.
Additionally, according to Shalett, many companies that entered the 'stay at home' trend saw their demand pulled forward. But that could reverse in the near future, resulting in lower demand.
Rather than looking to ASX retail shares for buys, Shalett says investors should consider those in financials, energy, materials, consumer services, and healthcare.
Such sectors seem "ripe for stock-picking ideas" she says.
